In August 2017, at the height of the Segwit2X reform, a group of miners decided to activate a Bitcoin hard fork, giving birth to Bitcoin Cash.
The discussion arose from the fact that, at that time, the Bitcoin structure did not allow to reach a sufficient number of transactions to be considered a real payment tool: while VISA is able to process 1700 transactions per second, the Bitcoin blockchain was capable of processing a maximum of seven, making the cryptocurrency unsuitable and insufficient to be a real payment system and showing the problem of scalability.
The evolution brought by Segwit2X, ie doubling the blocks, should have solved the problem, at least in part.
But a group of big miners, focusing even more on cryptocurrency payments, decided to move to an even larger block size of 8mb, and here is Bitcoin Cash.
After much discussion, only the Segwit was implemented.
A democracy problem
The basis of the problem is the structure in which Bitcoin was created, a democratic structure without centralization, in which the consensus is not guided by an institution or a central foundation, but must be built from time to time.
On the contrary, Bitcoin Cash Fundation exists for Bitcoin Cash, which aims to spread the use of BCH, as a model of what happens for Ethereum.
The same mining algorithm, similar profitability
The basic algorithm used for BCH and BTC is the same, SHA 256, for which it is possible to undermine both BCH and BTC with the same machine.
This made the mining performance very similar (from Bitinfocharts):
The yield of mining has in fact been influenced for the most part not by the birth of BCH, but by the quotation of the two cryptocurrencies.
What is the hash power?
What is the computing power necessary to maintain the two networks?
This calculation power depends on the number of transactions and shows how the calculation power is distributed among the miners. Apart from two very short moments there has never been a race.
In this case, due to the nature of BTC and BCH, there is no comparison, even now the average transaction cost of BTC is 18 times higher than that BCH.
Moreover, the second was born as a convenient tool for payments.
Values over time
Cryptocurrencies are also, if not above all, an investment tool.
How have BTC and BCH behaved since last August?
It went to a minimum where Bitcoin was worth only 3.8 times Bitcoin Cash to one, in January, when Bitcoin was worth over 10 BCHs.
Now the ratio is just over 6 and has remained constant in recent times.
There is no liquidity problem for either of them, with a daily volume equal to 4% of the capitalization for BCH and of 4.4% for Bitcoin.
As we know, on May 15th there will be an upgrade, not a hard fork, without divisions, for Bitcoin Cash, in which the block size will be quadrupled and the algorithm will be modified to avoid any duplication of transactions, making it even more efficient as means of payment, even if there is a risk of further concentration of mining.
The innovations for Bitcoin are also in turmoil with the development of Lighting Network, which speeds up and reduces transaction costs if they are repeated, creating preferential channels for payments, even if the accentuation of BTC will remain as a tool for conservation of value, rather than as a means of transaction, almost as if it were a sort of digital gold to keep in the safe.
We will see if any technological innovations will be more than the ancient Gresham Law.